Fiscal Policy Alternatives Essay

818 words - 3 pages

AbstractIn Economics 360 at the University of Phoenix I took part in a simulation to demonstrate fiscal policy. During this simulation I discovered several topics relating to what I was learning in the text. I will be discussing the effects of the changes in fiscal policy, several key points, how it relates to the workplace and my results from the growing further section.Fiscal Policy AlternativesThe governments of countries evaluate and work with fiscal policy on a daily basis. Fiscal policy is the result of two actions by the government. One is taxation and the other is spending. There are times when the decisions that are made need to be changed and alternatives found. In this simulation we are responsible for making decisions that affect the economic stability of the country of Erehwon. As we answer questions concerning a high budget deficit, budget surplus, fighting inflation, and recession, we will better understand the decisions that governments make for the good of their countries while dealing with inflation and recession.What were the effects of the changes in fiscal policy in the simulation?A high budget deficit is the result of a government spending more money than it takes in. The higher a countries fiscal deficit, the greater is their debt to others. As the deficit increases, there must be a way to pay it back and that usually included the raising of taxes or borrowing money.Four Key PointsFour key points were focused on in the simulation. The first was the effects of a budget deficit. A budget surplus is the opposite of a budget deficit. It is the result of a government taking in more money than it spends. The second was the GDP or the real income, the simulation showed me that when I had real income, unemployment decreased, and that's an excellent result. The third was the Aggregated Demand Curve. It is the curve that shows the Aggregated Demand at each price level. I had a difficult time understanding it until after the simulation, being able to move or change the curve and see what type of impact it had on the economy was intriguing. And the fourth was the unemployment rate - number of unemployed workers divided by the total civilian labor force, which includes both the unemployed and those with jobs (all those willing and able to work for pay). It was interesting to see what happened when I increased the spending for education of the low-income citizens. I saw...

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